Bankrupting the Family Class: The Future of Sponsorship Debt

In December of this year, the Supreme Court of Canada will hear the Attorney General of Canada and the Attorney General of Ontario appeal the Ontario Court of Appeal (OCA) decision, Mavi v. Canada (Attorney General), 2009 ONCA 794 [Mavi].

At issue in the OCA decision was how the government should behave when enforcing promises, known as undertakings, made by Canadian citizens or permanent residents who sponsor a relative’s immigration to Canada. Specifically, the issue was whether governments must exercise discretion on a case-by-case basis and comply with a duty of procedural fairness when enforcing the undertakings. Under the Family Class Immigration Regime established by the Immigration and Refugee Protection Act, S.C. 2001, c.27 (the new Act) and by the former Immigration Act, R.S.C. 1985, c. I-2 (the old Act), Canada relies on the economic ability of the sponsor to take financial responsibility for the sponsored relative’s essential needs. An obligation is imposed on the sponsor to ensure that the sponsored relative will not be dependent on a government for social assistance or other similar government benefits. Accordingly, the sponsor must execute an undertaking promising that the sponsor will fulfill his or her sponsorship obligations and that the sponsored relative would not require social assistance.

Background & Facts:

Mavi was initially brought forward by eight individuals whose sponsored relatives all received social assistance in Ontario during the period of their sponsorships. Under the terms of their undertakings, these eight sponsors owe a debt to Ontario for the amount of social assistance paid to their relatives. However, for circumstances beyond their control (see Appendix F of the OCA decision for a summary of the factual circumstances), the sponsors were unable to honour their undertakings. In other words, the sponsors were in default.

The sponsors applied for a declaration that they be discharged from their sponsorship obligations. They submitted that the language of the Acts stating that sponsorship debt “may be recovered” (see provisions below) indicates that the governments have discretion to forgive sponsorship debt.

The Old Act

s. 118(2) Any payments of a prescribed nature made directly or indirectly to an immigrant that result from a breach ofan undertaking referred to in subsection (1) may be recovered from the person or organization that gave the undertaking in any court of competent jurisdiction as a debt due to Her Majesty in right of Canada or in right of any province to which the undertakings assigned.

The New Act:

s. 145(2) Subject to any federal-provincial agreement, an amount that a sponsor is required to pay under the terms of an undertaking is payable on demand to Her Majesty in right of Canada and Her Majesty in right of the province concerned and may be recovered by Her Majesty in either or both of those rights.

The application judge found that the words “may be recovered” are merely enabling in the sense that they do no more than permit the government to enforce the debt. She further concluded that they do not impose either an obligation on the government to consider the appellants’ circumstance on a case-by-case basis, or a duty of procedural fairness.

The OCA Decision: How to Interpret ‘may be recovered’?

Taking a contextual approach to the interpretation of the language of the Acts, with particular focus placed on the wording of the regulations and the forms of the undertakings, the OCA held that the provisions in issue require the exercise of a case-by-case discretion concerning the enforcement of sponsorship debt. The legislative scheme contemplates that an agreement may be reached with a sponsor in satisfaction of the default or that no recovery action may be taken against a defaulting sponsor in the face of “other appropriate” circumstances. Accordingly, Ontario fettered or abused its discretion by adopting a policy inconsistent with the overall legislative scheme. The Ontario policy for the recovery of sponsorship debt limits the consideration of relevant facts of the case, compelling an inflexible and arbitrary application of the “Guiding Principle”, which requires a defaulting sponsor to repay the full amount of debt. Additionally, the policy surrounding deferral of enforcement of sponsorship debt is limited to considerations surrounding the sponsor’s financial circumstances that are documented. The policy therefore precludes itself from achieving what is contemplated by the legislative scheme.

The OCA Decision: Are sponsors owed a duty of procedural fairness?

A perhaps more controversial aspect of the OCA decision pertains to the question of whether sponsors are owed a duty of procedural fairness. The OCA held that given the nature of the decision of whether to enforce sponsorship debt, its public component, its finality and specificity, and its importance to the individual sponsors, the Canadian and Ontario governments owe sponsors a duty of procedural fairness. With regard to the Baker factors (factors and principles considered by courts in determining the scope and content of the common law duty of procedural fairness discussed by the SCC in the case Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 [Baker]), the parameters of this duty include: 1) an obligation to provide a process for individual sponsors to explain their relevant personal and financial circumstances; 2) an obligation on government to consider those circumstances; and 3) an obligation to inform any sponsor who makes submissions that their submissions have been considered and of the decision that was made. Moreover, the wording of the undertakings creates a legitimate expectation on the part of sponsors that the government will consider negotiating a settlement of sponsorship debt that goes beyond a consideration of their financial circumstances. In order to meet this legitimate expectation, it is necessary for Ontario to “hear” and consider the sponsor’s submissions.

The Future of Sponsorship Debt:

With immigration being a popular topic of debate (see marriage article and immigration crime article), it will be interesting to see the road the highest court takes. It would not be the first time the Supreme Court of Canada has added elements of procedural fairness into the immigration regime (see Baker for example); however, the question surrounding how much deference courts should give to the government and its administrative boards will most definitely arise. Upholding the OCA decision will inevitably force governments to revise their policies and practices surrounding the recovery of sponsorship debt. Notably, the OCA decision attempts to strike a balance between instilling elements of procedural fairness into the regime and recognizing that the exact nature of the parameters of procedural fairness is for the government to determine. For example, the court recognizes that an opportunity should be provided for sponsors to make submissions in writing or such other form that government deems appropriate about their circumstances, but rejects the appellants’ claim that the government is required to notify a sponsor when a sponsored relative applies for or obtains social assistance.

On a practical level, the outcome of this decision will have a significant impact on the family class regime. Proponents of immigration often comment that the length of undertakings, which can range from three to ten years depending on the sponsored relative’s age and relationship to the sponsor, is a heavy burden for a sponsor to take on considering that it is impossible to predict the future. The people involved in these undertakings are real people in real relationships where real things happen. The Ontario regime already makes exceptions for cases of sponsorship breakdown that involve abuse in the relationship (a case of a marital relationship that breaks down due to spousal abuse or domestic violence would fall under here); the OCA decision provides relief from sponsorship debt in other situations that warrant recognition. For example, consider a scenario where a sponsor becomes unemployed during the course of his or her undertaking and can no longer afford to support the sponsored relative. Upholding the OCA decision will potentially make people more willing to sponsor the immigration of relatives from abroad. In reply to these implications, opponents of immigration will likely comment that there may be an increase in the sponsorship of false relationships if relief is given from the pressure and responsibility imposed by the undertakings. Additionally, sponsors should be financially stable when they bring relatives over to Canada since they are initially aware that Canada relies on their economic resources to sponsor the foreign relative. Notably, before a strict debt recovery process was set up by Ontario, in 2004 almost 7,500 sponsored relatives were on social assistance in Ontario, at a cost to the taxpayer of about $70 million annually. Both sides present strong arguments, and it will be interesting to see what the fate of sponsorship debt for the family class will be.